Articles from 2012

China and shale: Who to bet on?

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Written by Nick Grealy

Published: 13 February 2012

A key part of the anti-gas narrative in Europe has been the assertion from quarters such as Ofgem, Greenpeace, the WWF and Tony Juniper that surging Chinese demand will inevitably make European LNG very expensive and insecure. Which, hey presto, leads to competitive renewables, nuclear and CCS. This conjuring is somewhat outdated in that it also assumes that there will be tiny amounts of shale, if at all in Europe, no US LNG exports either and all the while ignoring the emergence of Australia as prime LNG supplier to Asia. Don't even think of the huge Canadian LNG export to Asia capacity that now appears inevitable.

So how about a reality check on Chinese natural gas demand?

In 2010, China used 110 BCM (Billion Cubic Metres), of which 12.8 was LNG.So from that stage we can see that LNG plays a growing, but still minor, role in Chinese gas sources. China imports 3.55 BCM from Turkmenistan. Add together and we see that 85% of China's gas comes from domestic production of either conventional or Coal Bed Methane. In 2013 a pipeline from Myanmar will bring in more gas. Russia is still another source of gas, even as the two countries haggle over the price.

According to the China themselves in this presentation that doesn't mention shale China will certainly become a much greater user of natural gas:

But as usual, the uninvited guest to the party, ignored and hated in the UK and made to feel at home in China is shale. China has been looking at shale for almost as long as No Hot Air has.There may be any number of vested interests eager to sell us the shale catastrophe story, but China hasn't been buying, certainly not in the case of whether the resources exist. BP and Shell have been early movers in China and yesterday China announced that they see shale production of 100 BCM or a third of the total target by 2020. That will at worst case displace a lot of LNG and at best not really amount to much. Even a doubling of the percentage of LNG by 2020 will mean LNG imports of 40 BCM or so, easily reached from capacity then available.

BEIJING - The Ministry of Land and Resources (MLR) said Sunday that China will increase efforts to explore shale gas in 2012, a move expected to help restructure the country's energy supplies.

The government will strengthen the survey and appraisal of shale gas this year to speed up the development of the shale gas industry, MLR Vice Minister Wang Min said at a national geological survey conference.

Realizing scale production of shale gas will help ease the country's natural gas shortage and even change its entire energy supply structure, Wang said.

China has a rich reserve of shale gas resource, which is estimated at 31 trillion cubic meters, equivalent to the total amount of conventional natural gas, according to Wang.

Shale gas, a clean and high-efficiency energy resource, is produced from shale through a complicated process called hydraulic fracturing, or "fracking".

Can't help pointing out how refreshing it is to see shale not predicated with 'controversial'. But who to bet on on China gas demand and it's impact on Europe. Who knows more? China themselves or the great white Green fathers of Europe?